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Thoughts about economic and business issues by and for the NYU Stern community -- and others with similar interests. The content reflects the views of individual NYU faculty but not necessarily those of NYU. Comments and suggestions welcome. Special thanks to our tech consultant, MBA alum Tim Reilly.

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The day the music died*

March 16, 2014

A post by Luis Cabral

You may have heard this one: the Internet is killing the music business. As “record companies” lose revenue to free downloads of mp3’s, their incentive to develop new talent disappears. Is this the day the music died?

In fact, the opposite seems to be true. Joel Waldfogel, whose presentation I attended last week, uses radio playlists to determine the quality of music produced every year. If (say) 1996 music is played a lot in 2008 and 2009, we can say it was a good year. So what were the good years by this measure? He finds that music quality goes up during the 1960s, gradually declines in the 1970s and 1980s, bottoms out in the 1990s. And then — it shoots up at the start of the 21st century, just as music downloads were supposedly killing the business. In short: Not so fast, Ms American Pie! EMI may be struggling, but music is alive and well.

So what’s going on here? Waldfogel argues that digital technology has made production and distribution much cheaper, which opens up the market to many more musicians than before. Think about how easy it is to record a song on your computer and post mp3’s online. As a result, the hits come from a much broader field, with the result that they’re better, on average. Here’s an analogy. The average Dutch is taller than the average Chinese; but the tallest 5 Chinese are taller than the tallest 5 Dutch (I have not checked this, but I am willing to put money on it). Why? Because there are so many more Chinese than Dutch.

It’s clear, in any case, that the music industry has changed dramatically — and also, perhaps, that it’s changed for the better. I’m off now to practice my sax solos.

*Editor: This reference comes from Luis. No one I know is old enough to remember this song.

Update (Mar 31): David Byrne weights in. Great summary of his ambivalence: “I know this all can sound a bit pessimistic, which can seem odd as there is such a lot of great music out there.”

One Response to “The day the music died*”

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